Empowering India’s Workforce: Strategies for Employment and Skill Development

Dr Raj Nehru
Vice Chancellor: Shri Vishwakarma Skill University

India’s labour market has undergone significant changes over the past two decades. From 2001 to 2021, the employed workforce grew by 105 million, from 382.3 million to 487.4 million. However, the working-age population (15-64 years) increased by 294 million, from 656 million to 950 million during the same period. This discrepancy highlights a pressing issue: despite an increase in the employed workforce, the rate of unemployment has also risen. According to the Centre for Monitoring Indian Economy (CMIE), the overall unemployment rate in 2023-24 stands at approximately 8%, up from 7.4% in 2016-17.
Educational advancements are evident, with the Gross Enrolment Ratio (GER) rising from 10% in 2001 to 28% in 2023. However, this improvement in enrolment has not translated effectively into employment, and as per India Skills Report 2024, 50% of graduates are deemed unemployable by industry standards. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) has trained 13.7 million youths, yet only 22% have secured placements, raising concerns about the quality and relevance of training provided.
Self-employment remains the predominant form of employment, accounting for 55.8% of the workforce in 2022. This category has grown by 66% in the past five years. Casual and regular employment represent 22.7% and 21.5% of the workforce, respectively. Despite the high engagement in self-employment and the informal sector, which comprises 82% of the workforce, the quality of employment remains poor, with 90% of informal workers experiencing low job security and stagnant or declining wages. Self-employed individuals earn an average monthly income of Rs 11,973, regular workers Rs 19,010, and casual workers Rs 8,267. Furthermore, wage disparity persists, with women earning about 40% less than men for similar work.
Honourable Prime Minister’s laudable effort of Viksit Bharat can be further augmented by promoting labour-intensive sectors where the Employment Elasticity Index (EEI) is higher. It is crucial to push for the creation of productive non-farm employment and to support MSMEs. Formalizing employment in the informal sector and focusing on rural job creation, including investing in the development of rural industries, present substantial opportunities for job generation. Additionally, it is essential to invest in enhancing the quality, monitoring, and delivery systems of skill and vocational education.
Notably, the Hon Prime Minister has already taken significant steps such as the implementation of the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) for skill development, the Start-Up India initiative to support entrepreneurship, and the MUDRA Yojana to provide financial assistance to small businesses. These initiatives have laid a strong foundation, and with targeted efforts in labour-intensive sectors and rural job creation, we can drive significant employment growth and contribute to the vision of a developed India. As a Vice Chancellor of Skill Development University where we work very closely with industry and labour market and handle both demand and supply side, some suggestions below will surely help India to move faster towards achieving its objectives.

1. India needs to establish a robust, digitally enabled Labor and Learning Information Management System (LLIMS). This platform, beyond consolidating national labour, skill, and job-related information, can assist individuals in self-assessment, career choices, skill development, and connecting with employers. It should support local languages and act as a transformative tool to unlock potential and dynamically connect users to the real world of careers and employment, especially given the rapidly changing shelf life of skills.
2. Most surveys indicate that 87% of respondents desire internships. To address this demand, we propose increasing the National Apprenticeship percentage from 15% to 25% for MSMEs, especially in labour-intensive sectors, and raising the stipend by 25%, from Rs 1500 to Rs 2500. This would require an additional impact of approximately Rs 3000 crore if targets of apprenticeship have to double from 7lac to 15lac. Furthermore, certain regulations should be implemented to link the increased apprenticeship percentage to job conversion rates by the industry. Extending social security benefits such as ESIC to apprentices during their training period is also essential. Additionally, a Seed Fund body, modelled after the Provident Fund, should be created with contributions from employers, apprentices, and the government. This fund can provide exiting apprentices with the initial capital needed to start small businesses or pursue self-employment opportunities, immediately after they complete their apprenticeship.
3. The data shows that NSQF/PMKVY trained youths placement is at 22%. It is strongly recommended to align Recruitment rules to recently announced National Credit Framework. It will improve the employability of NSQF trained and certified youths by making these vocational certifications aspirational. This will also improve the enrolment NSQF/PMKVY trainees into National Apprenticeship Promotion Scheme.
4. Reports are indicating that Skill Training Centres across India has reduced from 12k to 1k. National Capacity for Skill Development needs to be increase. There are more than 53 Central Universities, 1243 Kendriya Vidyalayas. Create a mandatory skill development fund for all central government run academic institutions to offer need based NSQF aligned Skill and Vocational programs/ PMKVY programs, from their campuses (This should be based on local demands and local skill gap studies). Integrate vocational programs with mainstream education. This fund must be also utilised to set of Skill Centre of Excellence to promote world skill level standards inside their campuses.
5. Life Long Learning Focus. Create a fund that encourages Recognition of Prior Learning. The incentivization in the form of wage loss component through DBT needs to be increase and match the actual loss. The current Rs 500 is too less for a worker to attend a 7–10-day RPL Training. These RPL camps must be run within government infrastructure that is available and can be offered in a flexible model including evenings after work to improve quality and supervision
6. To improve the non-formal learning at higher education, create a fund that subsidises Recognition of Prior Learning in Higher Education and attracts eligible participants to pursue higher vocational education. This will benefit in their mobility globally, productivity locally and will also create job opportunities for freshers. This can be run in the existing available infrastructure in a part time mode and needs institutions to invest in capacity building. More than 35 % of (18-23 yrs age) youth enter labour market after 12th and is eligible to vertically move in higher education.
7. A fund that promotes to develop mobile training and skill development units in rural and tribal belts that is aligned with local skill gaps and local livelihood needs. This can be driven by District Skill Committees constituted and PMKVY can be integrated through this mobile vehicle
8. Given that self-employment and informal sector has seen a significant growth of more than 60% in last 5 years, there is a need to improve the ecosystem for promoting quality of employment in this sector. Allocate fund to all central government run institutions to promote Entrepreneurial Development Centre (EDC). These EDC’s can focus on local needs and demands and facilitate entrepreneurial skills linked to such needs. Institutions should be asked to provide Gross Entrepreneur Ration (GER) as a measure for utilising these funds. A proportion of these funds can be offered to state universities as well, interested in promoting GER linked EDC
9. A direction needs to be issued to all education and training institutions to also examine the thrust areas where Government of India is making significant investments ( e.g Railways, Space Health, Defence, Agritech etc) and map and align their skill and vocational development budget, funds and initiatives to same. A ratio between local and national can be planned accordingly.
10. Recent survey in India and International reports have highlighted that Artificial Intelligence will replace 60% of Jobs in next few years. Create a fund to establish 10 Technology Centre of Excellence ( a hands on skilling model) in PPP mode that focuses integration of AI ,Robotics, IOT, Cybersecurity related skills and prepare students and teachers for emerging Jobs.
11. Organised Taxi market in India is estimated to be $20 B in Fy 2023 of which 15% is with online cab aggregators. This market is expected to grow at the rate CAGR 6.6% in next 5 years and expected to become $27 B. A survey conducted indicated that taxi operators who are not with online cab aggregators reported 30% of their earning loss due to finding customers. Open Network for Digital Commerce (ONDC) is a good solution available. There is a need to create awareness and digital skilling to get this platform leveraged for this and other sectors that can be brought on digital platforms.
12. As per NITI Aayog, 77 lakh (7.7 million) workers were engaged in the gig economy in 2020-21 and the workforce is expected to “expand to 2.35 crore (23.5 million) workers by 2029-30”. A national policy on their social security can adress their concerns and fears where they would be entitled to fair terms of employment, wages, accident, health, retirement benefits which will be funded through contribution by the State and Central government as well as the platforms in a welfare fund be ensured through a law to encourage more youths to take advantage of their skills.
13. Incentivise Corporates to allocate their 50% of CSR funds towards skill and vocational education with a ratio proposed below class 12th and above.
14. Incentivise public pvt setup of skill development universities, with the corporates involved from conceptualisation to execution. With no revenue for corporates other than a) their advertisement b) treating the expense as tax deductible c) allocation of seats for the employees and their wards. Such institutions should not be within specified distance preferably in Tier 2 and Tier 3 areas, rural belts.
15. Special Recommendations for J&K & North-East: Jammu & Kashmir’s economy is primarily services-based and agriculturally oriented. The Gross State Domestic Product (GSDP) of J&K was estimated at Rs. 2.31 trillion (US$ 27.95 billion) for 2023-24, reflecting a Compound Annual Growth Rate (CAGR) of 8.84% from 2018-19 to 2023-24. J&K’s rich natural resources support the cultivation of a wide range of fruits, and its diverse agro-climatic conditions make it ideal for horticulture, contributing significantly to the economy. The food processing and agro-based industries, along with a thriving floriculture sector, highlight the region’s agricultural potential. Notably, J&K boasts Asia’s largest tulip garden, enhancing its floriculture appeal. The handicrafts of J&K, renowned globally, form a substantial industry, providing direct employment to approximately 340,000 artisans. This sector includes traditional crafts such as carpet weaving, silks, shawls, basketry, pottery, copper and silverware, papier-mâché, and walnut wood products. Small-scale and cottage industries are vital to the local economy, and government initiatives have prioritized these due to their significant employment and export potential.
    To generate employment in Jammu & Kashmir, the government should focus on key areas for skill development. Investing in modern agricultural techniques and animal husbandry can boost productivity and create jobs. Promoting horticulture with advanced training and enhancing food processing with modern facilities can open new employment opportunities. Developing tourism infrastructure and training programs can capitalize on the region’s unique attractions. Modernizing and marketing traditional handicrafts, supporting MSMEs with financial incentives and training, and promoting IT-enabled services through improved infrastructure and digital literacy can diversify employment.
    Jammu has several strengths for economic and employment development. Its fertile land and diverse agro-climatic conditions support a robust agriculture and horticulture sector, ideal for high-value crops and food processing industries. The region’s rich cultural heritage and renowned handicrafts offer significant employment and export potential. Tourism, driven by numerous religious and scenic sites, can generate substantial jobs with infrastructure and hospitality training. Emerging opportunities in IT and BPO sectors, supported by digital literacy and infrastructure investments, can prepare the workforce for the digital economy. A strong base of small and medium enterprises, particularly in food processing and handicrafts, can drive economic growth with appropriate support. Renewable energy projects, leveraging hydropower and solar potential, offer sustainable development prospects. Enhanced connectivity and strategic location further bolster trade, tourism, and industrial growth. Government initiatives like PMKVY enhance workforce skills, providing a solid foundation for sustainable economic development in Jammu.
    The plight of Kashmiri migrant youth living in government-provided camps is indeed a pressing issue. These camps often lack adequate infrastructure and resources, which directly impacts the quality of life and opportunities available to the residents, especially the youth. Many families in these camps face financial insecurity. This instability not only affects their daily lives but also prevents them from investing in education and skill development programs for their children. As a result, many youths are unable to pursue education beyond a certain level or acquire the skills needed for better employment opportunities. Living in such conditions can lead to psychological stress and social challenges among the youth. They may feel marginalized or disconnected from mainstream society, which affects their self-esteem and mental well-being. Lack of recreational facilities and social support networks further exacerbate these issues. Special emphasis should be placed on counselling and skill development programs for migrant youths, integrating them into the employment market and helping them build dignified careers. It’s imperative to develop their entrepreneurial skills and through microfinancing help facilitate their livelihood and self-reliance.
    The northeastern states are a treasure trove of natural resources, including fertile land, rich mineral deposits, and vast forest cover. This abundance presents a significant opportunity for economic development. Sustainable management of these resources can support agriculture, horticulture, mining, and hydropower generation. However, harnessing this potential requires robust infrastructure for transportation, processing, and value addition to ensure these resources translate into economic benefits for the region. For the North East, special emphasis should be placed on skill development in plantation agriculture, particularly in tea manufacturing, which is a significant industry in the region. Developing skills related to coal and oil mining and refining can create jobs and support the local economy. The manufacturing of plywood and other forest-based products also offers substantial employment potential. Additionally, the government should invest in IT-enabled services (BPOs) to diversify the employment base. Budget allocations should focus on establishing training centres, improving infrastructure, and providing incentives for industries to set up operations in the North East. This multi-pronged approach will harness the region’s unique strengths and create sustainable employment opportunities.
    Allocating budgetary resources to these sectors for training programs, infrastructure development, and market access can transform the employment landscape in Jammu & Kashmir and NorthEast. By focusing on these strategic areas, the government can foster economic growth and create sustainable employment opportunities in these regions as well.
    Working on some of these ideas will undoubtedly contribute to shaping effective policies for our country’s future